Piketty's Numbers Don't Add Up

Ignoring dramatic changes in tax rules since 1980 creates the false impression that income inequality is rising.

By

Martin Feldstein

May 14, 2014 7:31 p.m. ET

Thomas Piketty has recently attracted widespread attention for his claim that capitalism will now lead inexorably to an increasing inequality of income and wealth unless there are radical changes in taxation. Although his book, "Capital in the Twenty-First Century," has been praised by those who advocate income redistribution, his thesis rests on a false theory of how wealth evolves in a market economy, a flawed interpretation of U.S. income-tax data, and a misunderstanding of the current nature of household wealth....